Tag Archives: foreclosure

How to Clear Debt With Debt Consolidation

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by Andreas Underhill

Individual customers struggling to pay of high credit card, personal overdrafts and store cards choose to consolidate debt. Debt consolidation is nothing but the effort to pay off these numerous loans by availing of one single loan. Of course, it only works if one is able to take the loan at a considerable lower interest rate or a fix rate. It is obviously more advantageous if one has to service one loan instead of two or three loans.

In debt consolidation one can move from numerous unsecured loans to one secured loan, more often against an asset like a property that serves as the collateral. This collateral is generally the house against which the mortgage is secured. This collateralization helps in getting a lower interest. The collateral allows the owner of the house, for a foreclosure to pay the loan back. Since the risk of the lender is also reduced, the interest rate is generally on the lower side.

One gets a bad credit rating for a single missed or late payment on a credit agreement. The credit reference agencies register an adverse credit which makes any kind of borrowing difficult leading to higher monthly repayments. In this situation only a few banks may be willing to lend. That is precisely the reason why consumers choose to consolidate the debt by mortgaging the house.  However debt negotiation may be more advantgeous.

Many times, the companies that offer debt consolidation, they try to lessen the loan, particularly if they see that a customer is becoming a bankrupt. The debt consolidator will purchase the loan at a lesser price. An intelligent consumer will actually go around checking who will provide the maximum saving. Prior to taking the decision to consolidate the debt, caution and prudence should be applied, since bankruptcy can adversely affect the ability of the debtor in paying off the loan.

When taking loans against an asset, say the house, one needs to be aware that the loans can be worsened in case of a shift in personal situation. One can choose at that time Payment Protection Insurance to ensure peace of mind. The flip side is, one needs to churn out more money monthly.

All those, who do not avail the PPI (Payment Protection Insurance), should know that their personal property may be lost or repossessed in a situation when personal circumstances change. In such a case, it is always advisable for the debtor to look for other debt consolidation solutions.

Debtors who do not opt for a PPI should be aware that their property is at a risk of getting reposed in a situation where the personal circumstances have changed. Possibly a debtor would be comfortable looking for other debt solution than mortgaging the house or property. More so, if the person has had a history of bad credit rating. Other debt solutions do not work, if an individual has already solicited a secured loan by mortgaging his house.

Theoretically, the benefit that the consolidation of debt offers to a consumer at higher rate gets largely reduced as companies see this as a chance to refinance, that too at a higher fee. Sometimes, these fees can be closed to the fees paid for mortgage. However, one needs again to know that sometimes, some corrupt companies wait until the debtor to be cornered and then charge maximum fees. The consumer is in a worse situation here. He understands that his property may be repossessed or lost if they are not agreeing to refinance, and generally they do so at higher fees and complete the debt consolidation. This practice is known as predator lending. The good news is that, most debt consolidation firms, and the good ones, do not go for predator lending.

About the Author:
Get honest free quality advice on how to consolidate debt with A1 Debt Solutions.

Five Surprising Facts About Your Credit Score

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by Kurt Novak

Most people understand the fact that their payment history has an impact on the credit scores, but there are a few additional factors that are used by the credit bureaus to calculate your score.

Here are five surprising facts about credit scores:

1. Income: Your income level has no bearing on your credit score. A person earning below minimum wage could easily have a great score while a millionaire earning six-figures per year could have a really low credit score. The basis behind the scoring system is to determine how responsible a person is with the money they have, not how much money they make.

2. Old Accounts: When the credit reporting bureaus consider your credit score, they look at the types of credit you have and how old your accounts are. An older account that is still operating shows a lender the next time you apply for credit that you haven’t consolidated or negotiated your old debts, but have actively maintained them with a level of financial responsibility. If you intend to pay off some debts, pay off the newer ones first and leave the older ones open if you can.

3. Don’t Pay Collection Agencies: When you pay of debts that are more than two years old you will not be helping your credit score. The score is calculated using the date of the last account activity. If the date is more than two years ago it starts to lose some of the negative impact.

Keep in mind that if you speak to a collection agency and set up a payment plan this may be looked at as an agreement and the date may be listed as the date of the conversation. This type of contact can reset the time period on the date that you have the conversation.

4. Debt/Limit Ratio: The credit reporting bureaus reward those people who can show that their spending habits are controlled enough to not require them to max out their credit balance or overdraw their credit limit. Make sure that all your balances are way below your actual credit limit to increase your credit score. Keeping your card balance below 30% of your credit limit will definitely improve your score.

Remember that when you are in debt, the banks are profiting. It won’t hurt to increase your credit limit it you are able to act responsibly and only use the amount that you can comfortably handle with your current income.

5. Frequency of Credit Applications: Did you know a full 10% of your total credit score comes from the number of times you’ve applied for credit? Every time someone pulls your credit, the enquiry is listed on your credit report. The more enquiries shown on your report, the lower your score will go.

If you know you’ve already applied for a lot of credit, then spend a few months and pay down your balances before you apply for anything new. The simple act of not applying for new credit will increase your score as older applications fall away.

About the Author:
Author Kurt Novak is a long-time property investor who helps home owners avoid foreclosure. His blog shows how to find the best Columbus Loans and how to increase your Crdit Report.

Did You Know These 5 Facts About Credit Scores?

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by Kurt Novak

Most consumers are aware that their payment history has a direct effect on their credit rating, but there are a number of other factors that credit bureaus use to calculate your credit score.

Here are 5 facts about credit scores that might surprise you:

1. A persons income level has nothing to do with their credit score. You could easily see a millionaire that earns six figures a year with a very low credit score. You could just as easily see a person that earns minimum wage with a strong credit score. The scoring system is used to measure how responsible a person is with the money they have, not how much they earn.

2. Age of Accounts: When the credit bureaus calculate your score, they study the type of accounts you have and the age of your accounts. An account with some age shows potential lenders that you have never negotiated or consolidated your old debts. Instead you have been able to maintain them a high level of responsibility. If you need to pay off some of your debts, pay the newer ones and leave the older ones alone if at all possible.

3. Don’t Pay Collection Agencies: When you pay of debts that are more than two years old you will not be helping your credit score. The score is calculated using the date of the last account activity. If the date is more than two years ago it starts to lose some of the negative impact.

You should be aware though that if you negotiate some sort of payment plan with a collection agency, this will be considered an agreement and the date of activity can be shown as the date of the conversation.

4. Debt/Limit Ratio: The people that can show the reporting bureaus that they have their spending habits well controlled will be rewarded. When a person is able to keep their balances well below their allowed limit, the score will be increased. It is best to keep all card balances below 30% of the credit limit.

Remember that when you are in debt, the banks are profiting. It won’t hurt to increase your credit limit it you are able to act responsibly and only use the amount that you can comfortably handle with your current income.

5. Frequency of Credit Applications: Did you know a full 10% of your total credit score comes from the number of times you’ve applied for credit? Every time someone pulls your credit, the enquiry is listed on your credit report. The more enquiries shown on your report, the lower your score will go.

If you’ve applied for a lot of credit you might want to spend the next couple of months and pay the balances down before applying for anything else. The act of not applying for new accounts will begin to increase your score as the older inquires drop off.

About the Author:
About the author: Kurt Novak is a long-time property investor specializing in helping home owners avoid foreclosure. Read his blog to find the best Columbus Loans and successfully improve your Crdit Report.